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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. The number of units of any other good Y that must be sacrificed to acquire good X. Only relative prices matter






2. The ability to set the price above the perfectly competitive level






3. Ei > 1






4. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary






5. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.






6. The difference between your willingness to pay and the price you actually pay. It is the area below the demand curve and above the price






7. In the case of a public good - some members of the community know that they can consume the public good while others provide for it. This results in a lack of private funding and forces the government to provide it






8. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good






9. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.






10. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately






11. A good for which higher income increases demand






12. Entry of new firms shifts the cost curves for all firms upward






13. The least competitive market structure - characterized by a single producer - with no close substitutes - barriers to entry - and price making power






14. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.






15. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.






16. Demand for a resource like labor is derived from the demand for the goods produced by the resource






17. Two goods are consumer substitutes if they provide essentially the same utility to consumers






18. Another way of saying that firms are earning zero economic profits or a fair rate of return on invested resources






19. Costs of inputs - technology and productivity - taxes/subsidies - producer speculation - price of other goods that could be produced - and number of sellers all influence supply






20. The rate paid on the last dollar earned. This is found by taking the ratio of the change in taxes divided by the change in income






21. Production inputs that the firm can adjust in the short run to meet changes in demand for their output. Often this is labor and/or raw materials






22. A firm that has market power in the factor market (a wage-setter)






23. A very diverse market structure characterized by a small number of interdependent large firms - producing a standardized or differentiated product in a market with a barrier to entry






24. A legal maximum price above which the product cannot be sold. If a floor is installed at some level above the equilibrium price - it creates a permanent shortage






25. Exists when the production of a good imposes disutility upon third parties not directly involved in the consumption or production of the good






26. The output where ATC is minimized and economic profit is zero






27. AFC = TFC/Q






28. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic






29. Total product divided by labor employed. APL = TPL/L






30. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.






31. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received






32. Pm > MR = MC - which is not allocatively efficient and dead weight loss exists. Pm > ATC - which is not productively efficient. Profit > 0 so consumer surplus is transferred to the monopolist as profit






33. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good






34. Ed = 0 - no response to price change






35. The lost net benefit to society caused by a movement away from the competitive market equilibrium






36. The change in quantity demanded resulting from a change in the price of one good relative to other goods






37. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good






38. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied






39. MUx / Px = MUy/Py or MUx/MUy = Px/Py






40. Measures the value of what the next unit of a resource (e.g. - labor) brings to the firm. MRPL = MR x MPL. In a perfectly competitive product market - MRPL = P x MPL. In a monopoly product market - MR < P so MRPm < MRPc.






41. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms






42. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient






43. Goods that are both nonrival and nonexcludable. One person's consumption does not prevent another from also consuming that good and if it is provided to some - it is necessarily provided to all - even if they do not pay for that good






44. Ed = 8 - infinite change in demand to price change






45. The marginal utility from consumption of more and more of that item falls over time






46. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage






47. 0 < Ei < 1






48. The imbalance between limited productive resources and unlimited human wants






49. The total quantity - or total output of a good produced at each quantity of labor employed






50. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability